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Marketing high-risk investments: what do recent changes mean for you?

Faced with high inflation and cost of living challenges, UK consumers may be seduced by marketing promises of higher investment returns, especially where technology allows investment decisions to be made at the click of a mouse. Yet higher potential returns come with increased investment risks which consumers may not understand or be able to bear.

As part of its Consumer Investment Strategy priority, the Financial Conduct Authority (FCA) has acted to introduce tough new standards for the marketing of investments, particularly high-risk investments, to UK customers. The package is designed to improve the process by which marketing communications known as ‘financial promotions’ are approved for issue. It will also introduce new protections and frictions into the customer journey for high-risk investments to better support consumer decision-making.

If your business is involved in marketing investment products to UK customers, you should understand and comply with this new package of rules for financial promotions. Failure to do so could result in serious problems for you or your business. Harper James’ financial services solicitors can offer extensive expertise on compliant financial promotions, including on the new enhanced regime for high-risk investments.

What are ‘financial promotions’?

A financial promotion is an ‘invitation or inducement to engage in investment activity’. Financial promotions can include communications to customers or prospective customers via a wide range of marketing media such as mailshots, newspaper adverts, websites, Facebook posts, tweets and so on.

To count as a financial promotion, marketing material must include some element which can be seen as inviting or inducing a customer to take a tangible step towards transacting in a particular financial product.

Who is allowed to issue a financial promotion?

You are prohibited from sending out a financial promotion, unless:

  • Your business is authorised by the FCA
  • Your promotion has been approved by an FCA-authorised firm
  • You benefit from a specific exemption.

So, if you are not authorised, you will usually need to arrange for another FCA-authorised firm to check and formally approve any marketing materials before you use them. The approving firm will help to make sure that your promotions comply with relevant regulatory standards. Authorised firms are likely to charge you for providing this approval.

Currently any FCA-authorised firm can approve a financial promotion for an unauthorised business. The FCA has consulted on introducing a new ‘gateway’ for authorised firms who wish to approve promotions for other businesses. This is intended to improve the quality of promotions which reach customers. However, it may mean that it will be harder or more expensive to find an authorised firm to approve your financial promotion in future.

Before a ‘gateway’ for approving firms comes into play, the FCA has moved now to impose new obligations on authorised firms who approve financial promotions for other businesses.

What are the new requirements for firms approving financial promotions for other firms?

The FCA is aiming to drive up financial marketing standards by ensuring that authorised firms do not approve poor quality financial promotions.

Where an authorised firm is approving a financial promotion for another firm, the approving firm must show that it has the knowledge and expertise to be able to properly assess whether the financial promotion properly reflects the features of the promoted product and complies with relevant regulatory requirements. Each financial promotion a firm approves must contain a note of the approving firm’s name and the date of approval.

An approving firm must also carefully consider any conflicts of interest which it might face when approving a promotion. It should also take reasonable steps to ensure that a financial promotion which it has approved remains compliant whilst it is still in issue.

To help approving firms meet these new standards, the FCA has also issued a new guidance document which provides further detail of its expectations for approving firms.

What types of investments are covered by the new ‘customer journey’ rules for high-risk investments?

Previous FCA rules for financial promotions applied a patchwork of different rules to specific investment products. This made it more difficult for financial businesses to understand and comply with marketing standards. Under the new regime, the FCA is simplifying and streamlining the rules as well as adding additional layers of protection.

The FCA now groups investments into 3 main categories. These are:

Mass market investments (MMI): mainstream consumer investments which are not subject to marketing restrictions e.g. listed or exchange-traded investments.

Restricted mass market investments (RMMI): higher risk investments which can be marketed to retail customers but where restrictions on marketing are appropriate for consumer protection reasons.

Non-mass market investments (NMMI): the highest risk investments which should not be marketed to ordinary retail customers.

Most of the new ‘customer journey’ rules for high-risk investments are being applied to the RMMI category. Some new rules also apply to the NMMI category. These NMMI rules are not in scope of this article.

What are examples of investments classified as RMMI?

RMMI investments include:

  • Non-readily realisable securities: investments which are not listed on a market or exchange and so may be difficult for investors to sell
  • Peer-to-peer (P2P) lending: investments where investors lend money directly to borrowers, generally through an online platform.

From October this year, RMMI will also include certain cryptoassets. Further information on new requirements for UK financial promotions for cryptoassets is available in our knowledge article ‘Marketing cryptoassets to UK consumers: what you need to know about the new standards’.

What are the new customer journey requirements for RMMI financial promotions?

The new FCA requirements are designed to improve customer understanding of the risks associated with investing in RMMI and to introduce additional safeguards into the consumer journey. New measures include:

  • Display of prominent mandatory risk warnings, including links to an expanded summary of risks for the specific product being promoted
  • Banning incentives for investing in RMMIs such as free gifts, initial bonuses or ‘refer a friend’ schemes. A business which benefits from the proceeds of an investment (such as a company raising capital through the sale of non-readily realisable securities) can however offer RMMI investors discounted or free real economy goods and services.
  • Introducing a ‘cooling off period’ and a personalised pop-up risk warning before first time investors part with their money for financial promotions which incorporate an application or response form
  • Ensuring firms allocate each customer to an appropriate customer category and make an ‘appropriateness assessment’ to decide whether a high-risk investment is likely to meet the customer’s needs
  • Asking firms to keep detailed records to monitor compliance with the regime and allow better evaluation of customer outcomes under the new standards.

These new requirements for high-risk investment financial promotions are extensive and detailed. Our financial services solicitors are ready to support you in getting to grips with the new rules and ensuring that you comply with the rules on financial promotions for high-risk investments.

When did these changes take effect?

The requirement to include a prominent risk warning when promoting high-risk investments was introduced from 1 December 2022.

All the other rules for high-risk investment financial promotions and approving firms came into force on 1 February 2023.

What are the consequences if my business does not comply with the new high-risk investment financial promotions rules?

Any business which issues a financial promotion without appropriate authorisation is committing a criminal offence. The offence attracts a penalty of an unlimited fine and/or 2 years in prison.

The FCA is also clear that it intends to take supervisory action where firms do not meet its standards for the high-risk investment customer journey. Potential regulatory action includes asking firms to withdraw non-compliant promotions, imposing restrictions on firms to prevent harmful promotions and, in the more serious cases, launching a formal enforcement investigation. If a breach of rules is proven, an FCA investigation can lead to public censure, fines or restrictions on a firm’s ability to do business going forward.


This comprehensive package of new rules for high-risk investment financial promotions underlines the importance which the FCA places on firms meeting high marketing standards and supporting good consumer decision-making. If your business is marketing investments to UK customers you should ensure that you understand your responsibilities and comply with relevant rules.

Harper James’ financial services solicitors are fully conversant in the UK regime for financial promotions, including the new regime for high-risk investments. Please do not hesitate to contact our team if you require any further information or advice.

About our expert

John Pauley

John Pauley

Financial Services Partner
John is a specialist solicitor with extensive expertise in financial services regulation. He advises financial institutions, services providers, and merchants on regulated activities including payments, e-money, consumer credit, data protection, anti-money laundering, and gambling operations.

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